{"id":887511,"date":"2016-03-09T07:45:19","date_gmt":"2016-03-09T14:45:19","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=887511"},"modified":"2016-03-08T14:58:52","modified_gmt":"2016-03-08T21:58:52","slug":"federal-court-in-indiana-permits-city-to-sue-design-subconsultant-despite-lack-of-privity","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/federal-court-in-indiana-permits-city-to-sue-design-subconsultant-despite-lack-of-privity\/","title":{"rendered":"Federal Court in Indiana Permits City to Sue Design Subconsultant Despite Lack Of Privity"},"content":{"rendered":"<p>Jane Fox Lehman | Constructlaw\u00ae | February 14, 2016<\/p>\n<p><strong><em>City of Whiting, Indiana v. Whitney, Bailey, Cox, &amp; Magnani, LLC<\/em>, 2015 U.S. Dist. LEXIS 150229 (N.D. Ind. Nov. 5, 2015)<\/strong><\/p>\n<p>The City of Whiting, Indiana (the \u201cCity\u201d) contracted with American Structurepoint, Inc. (\u201cEngineer\u201d) to design a lakefront park that would protect its shoreline from erosion (the \u201cProject\u201d).\u00a0 Engineer subcontracted with Whitney, Bailey, Cox, &amp; Magnani, LLC (\u201cSubconsultant\u201d) to serve as the marine engineer for the Project (the \u201cSubcontract\u201d).\u00a0 Pursuant to the Subcontract, Subconsultant designed a revetment to protect the Project shoreline.\u00a0 The revetment failed, damaging the City\u2019s property and necessitating remediation.<span id=\"more-1347\"><\/span><\/p>\n<p>Engineer assigned to the City any claims Engineer might have had against Subconsultant relating to the Subcontract and the revetment failure.\u00a0 The City then sued Subconsultant, asserting three counts as Engineer\u2019s assignee, and asserting breach of the Subcontract, negligence, and negligent misrepresentation in its own capacity.\u00a0 Subconsultant filed a motion to dismiss, arguing that the City\u2019s complaint failed to state a claim.<\/p>\n<p>The district court granted Subconsultant\u2019s motion in part and denied it in part.\u00a0 The court first observed that Indiana law both permitted assignment of claims and recognized the causes of action the City asserted through the assignment.\u00a0 While the City had erred by pleading that it sought to recover \u201cits own damages\u201d through these causes of action, the liberal federal pleading rules \u201cdo not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.\u201d\u00a0 The court denied Subconsultant\u2019s motion to dismiss the causes of action the City asserted through the assignment.<\/p>\n<p>The court next explained that the City\u2019s claim for breach of the Subcontract, which the City asserted on the theory that it was a third party beneficiary of the Subcontract, \u00a0survived Subconsultant\u2019s motion to dismiss if the City had shown clear intent by Engineer and Subconsultant to directly benefit the City.\u00a0 Intent could be shown by Subcontract language.\u00a0 The Subcontract specifically named the City as the recipient of Engineer\u2019s services, obligated Subconsultant to assist Engineer with those services using a professional standard of care, and incorporated the terms of Engineer\u2019s contract with the City.\u00a0 The court denied Subconsultant\u2019s motion to dismiss the City\u2019s claim for breach of the Subcontract.<\/p>\n<p>Turning to the City\u2019s negligence count, the court concurred with Subconsultant\u2019s position that Indiana\u2019s \u201c<a href=\"https:\/\/www.myconstructionexpert.com\/blog\/texas-court-of-appeals-holds-property-owners-negligence-claim-against-design-professional-barred-by-economic-loss-rule\/\" target=\"_blank\">economic loss rule<\/a>\u201d precluded the City\u2019s ability to recover in tort for \u201cdisappointed contractual or commercial expectations,\u201d which included any damage to the Project.\u00a0 The City\u2019s complaint alleged that it had suffered extensive damage to its \u201cproperty at the Project, including the . . . pavilion, gazebo, and fishing pier.\u201d\u00a0 The court held that, regardless of whether damage to the pavilion, gazebo, and pier constituted damage to the Project, the City\u2019s allegations had not foreclosed its ability to recover for damage to <em>other\u00a0<\/em>property because the word \u201cincluding\u201d signified a non-exhaustive list.\u00a0 The court denied Subconsultant\u2019s motion to dismiss the City\u2019s negligence count.<\/p>\n<p>Finally, the court observed&#8230;<\/p>\n<p><a href=\"http:\/\/constructlaw.com\/2016\/02\/14\/federal-court-in-indiana-permits-city-to-sue-design-subconsultant-despite-lack-of-privity\/\" target=\"_blank\">To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jane Fox Lehman | Constructlaw\u00ae | February 14, 2016 City of Whiting, Indiana v. Whitney, Bailey, Cox, &amp; Magnani, LLC, 2015 U.S. Dist. LEXIS 150229 (N.D. Ind. Nov. 5, 2015) The City of Whiting, Indiana (the \u201cCity\u201d) contracted with American Structurepoint, Inc. (\u201cEngineer\u201d) to design a lakefront park that would protect its shoreline from erosion&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/federal-court-in-indiana-permits-city-to-sue-design-subconsultant-despite-lack-of-privity\/\">Continue reading <span class=\"screen-reader-text\">Federal Court in Indiana Permits City to Sue Design Subconsultant Despite Lack Of Privity<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4,9009],"tags":[19,284,75],"class_list":["post-887511","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-design-professionals","tag-construction-defects-2","tag-design-professionals","tag-engineer","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Federal Court in Indiana Permits City to Sue Design Subconsultant Despite Lack Of Privity - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"description\" content=\"Pursuant to the Subcontract, Subconsultant designed a revetment to protect the Project shoreline. 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